What is your opinion on student loan forgiveness?

[apl68]

I would have liked to have seen something more carefully targeted toward relieving those most in need of it.  At least it wasn't the extreme maximalist version of blanket loan forgiveness that it could have been.  It will help a great many people out. 

Although the usual parties will loudly try to make political hay out of this, I don't know that it will actually affect ordinary voters' attitudes all that much.  Whether the Democrats receive a shellacking in the mid-terms will depend mainly on what the economy is like at that time, and whether they can continue to show some success in passing actually useful legislation that isn't all about the culture wars and identity politics.  They've had some progress in that respect lately.

[downer]

Is it the most rational way to promote higher ed and the good of the nation? No.
Is it a populist move aimed at getting votes? Yes.
Is it a terrible decision? No. There's something to be said for it.
Is it good material for politicians and tweeters to make stupid comments about? You betcha.

[Puget]

I would have liked to have seen something more carefully targeted toward relieving those most in need of it.

It actually is pretty targeted-- $125k income cap, and double the amount of forgiveness for borrows who received Pell grants. According to WH, nearly 90% of relief $ go to borrowers earning less than $75k.

[jimbogumbo]

This: https://www.esquire.com/news-politics/a40990240/student-loan-forgiveness-biden-inflation-national-debt/

[dismalist]

This: https://www.esquire.com/news-politics/a40990240/student-loan-forgiveness-biden-inflation-national-debt/

Contributing to inflation, yes. If the whole thing were financed by printing money you'd likely get a ca. 1% rise in the price level. [Back of the envelope, 1% rise in the money supply].

Finance by borrowing from the public? That has to be serviced, one way or another, either through taxes or through -- inflation.

There is no freebie.

[Anon1787]

How is $125K (or $250K couples) considered targeted when that is the top 5-10% of the income distribution? It's like giving a temporary SALT deduction to the upper middle class.

Loans should not be forgiven. Debtors should be given money to pay off the loans so that the budgetary costs are immediate and transparent. Giving money would also require action by Congress rather than by the president abusing executive authority (see what Nancy Pelosi said about it in the past), which makes the office ever more imperial.

[apl68]

How is $125K (or $250K couples) considered targeted when that is the top 5-10% of the income distribution? It's like giving a temporary SALT deduction to the upper middle class.

That was my thought on the matter.  No doubt in Manhattan and San Francisco $125K is considered poverty-line, but where I live very few people, college-educated or not, have that kind of money.  It's close to three times my annual income.  A lot of modestly-paid folks are going to think of this as a giveaway toward people wealthier than themselves.  So are any number of Republican tax cuts for upper income levels, of course, but taxes are so universally detested that there's less tendency to be jealous about tax cuts.

I never had any student loan debt, but I married into it.  Badly delinquent debt that they were making noises about foreclosing on.  For the first couple of years of our marriage we put everything we had above basic expenses toward paying down that debt.  She told all sorts of stories about how she had misunderstood and thought it was some kind of no-strings-attached aid for education majors, and I, trusting husband that I was, believed her. 

Only with hindsight did I realize that she had probably deliberately tried to welsh on the debt, in the belief that changing her last name to mine and moving to the state where I was already living would make her impossible to trace.  It was by no means the biggest deception she ever tried on me and on others.  They found her in almost no time, BTW.

There are probably as many cheats who will get away free due to this blanket debt relief as there are genuinely needy people who will benefit.  Any time you try to help the needy you're going to end up being taken advantage of by the greedy.  I wish there was at least an effort being made to minimize the latter here.

[Anon1787]

According to Wharton, the top 60% of the income distribution receives 60% of the benefit while the bottom 20% receives 14% of the benefit. That's how you'd structure debt cancellation if you're trying to maximize votes rather than help the worst off.

https://budgetmodel.wharton.upenn.edu/issues/2022/8/26/biden-student-loan-forgiveness

[mahagonny]

According to Wharton, the top 60% of the income distribution receives 60% of the benefit while the bottom 20% receives 14% of the benefit. That's how you'd structure debt cancellation if you're trying to maximize votes rather than help the worst off.

https://budgetmodel.wharton.upenn.edu/issues/2022/8/26/biden-student-loan-forgiveness

Who should I put more faith in, Wharton or the White House?

I would have liked to have seen something more carefully targeted toward relieving those most in need of it.

It actually is pretty targeted-- $125k income cap, and double the amount of forgiveness for borrows who received Pell grants. According to WH, nearly 90% of relief $ go to borrowers earning less than $75k.

[Puget]

According to Wharton, the top 60% of the income distribution receives 60% of the benefit while the bottom 20% receives 14% of the benefit. That's how you'd structure debt cancellation if you're trying to maximize votes rather than help the worst off.

https://budgetmodel.wharton.upenn.edu/issues/2022/8/26/biden-student-loan-forgiveness

Who should I put more faith in, Wharton or the White House?

I would have liked to have seen something more carefully targeted toward relieving those most in need of it.

It actually is pretty targeted-- $125k income cap, and double the amount of forgiveness for borrows who received Pell grants. According to WH, nearly 90% of relief $ go to borrowers earning less than $75k.

They aren't really different, Anon is just framing the data in a way which is pretty misleading by talking about the "top 60%". If you look at the actual data provided by the link, you can see that the bottom 3 quantiles get nearly 80% of the benefits, and the group that benefits the most is the middle quantile (median wage for US adults working full time is around $55k). The top 10% get less than 1% (the top 5% got nothing). So Anon's claim that the top 5-10% of the income distribution benefits is just completely factually incorrect. Whatever else you think of this as policy, it is pretty solidly targeting the middle class, not the wealthy.

Now, it is certainly true that only 14% goes to the bottom quantile, which is not surprising given that most of these adults probably did not go to college. But to me this is an argument for helping them in other ways, not an argument for not doing college debt relief for those who did attend college. Indeed, low-wage workers who do have college debt stand to benefit the most, not just because they likely had Pell grants (doubling their loan forgiveness amount), but due to the more generous income based repayment plan and coverage of unpaid interest that is also included.

[Anon1787]

The bottom 3 quintiles receive 74% of the benefit but the top 3 quintiles receive 62% of the benefit. If you were going to target those who are struggling you'd pick the bottom 40% ($51K/year or less), who receive only 35% of the benefit. Those in the top 40% ($82K/year for 60th and $141K/year for 80th) are far from poor and yet receive 26% of the benefit. Lots of votes to be harvested in those groups.

[mahagonny]

https://www.washingtontimes.com/news/2018/mar/22/democrats-more-educated-republicans-pew-research-c/

Re: targeting voters

[Sun_Worshiper]

As policy, it is not great. It does not get at the underlying problem and is not targeted in a way that exclusively helps the people most in need. There is also the question of what this means for future borrowers or past borrowers who paid their debt.

That said, it will help some people and it will probably not have any meaningful effect on inflation. Of all the policies to be outraged about, this one ranks pretty low from my perspective, and I think most people will similarly be unbothered by it. I doubt it will have any meaningful impact on future elections or on Biden's popularity (Edit - beyond adding to the growing, and accurate, narrative that he quietly gets things done).

[RatGuy]

*snip* I think most people will similarly be unbothered by it.

I don't have any student loans, but my spouse does. When she was 18, she was living in an area hit hard by Hurricane Katrina. The only way she'd be able to attend college was via loans, and for a variety of personal reasons took out the max in order to escape to a college up the road. Neither she nor her mother had any idea of the ramifications of such a loan, given their poverty level. She deferred the first few years after leaving college, compounding the overall mistakes. Since then, her monthly payments are around 10% of her paycheck. For us, this amounts to some considerable debt relief.

That said, there are few people in our immediate circle of friends who have any sympathy. Comments like "she made dumb choices" and "she's just so lazy" and "I guess you want others to may for your dumb mistakes" are fairly common. So, yeah, I think there are a lot of people who are bothered by it -- will it change their voting habits? No. But I'm getting a bit weary of the near-constant beratement.

[dismalist]

The data on which income quintiles the beneficiaries are in are smoke and mirrors. Those in the lowest quintiles didn't go to college all that much! So money is given to those who benefit from the college wage premium. Great.

The law will have a meaningful impact on future tuition, though. Roughly speaking, 60% of additional government aid to education gets eaten up by tuition increases.

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf